WASHINGTON, D.C. – Federal banking regulators today announced proposed rules to revise and modernize the Community Reinvestment Act (CRA).
In response, Mike Calhoun, president of the Center for Responsible Lending (CRL), made the following statement:
Federal banking regulators today issued a notice of proposed rulemaking to modernize the rules that implement the Community Reinvestment Act (CRA). This represents a significant step forward in ensuring that financial institutions address the credit needs of Asian, Black, Latino, Native American, rural and other underserved communities. The Federal Reserve Board and the Federal Deposit Insurance Corporation both unanimously approved the proposal, and they were joined by Michael Hsu, Acting Comptroller of the OCC.
Low-income communities and people of color continue to be underserved by the nation’s financial system when seeking a wide range of financial services, whether for mortgages, automobile financing, or small business lending. Previous policies helped create today’s racial wealth gap by allowing lenders to use abusive and predatory lending practices for systemic exploitation and exclusion of these borrowers.
When 98 percent of US financial institutions receive passing scores in their CRA evaluations, yet the racial wealth and homeownership gaps are the same, if not wider, than they were 50 years ago, it is not enough for regulators to just tell financial institutions to ‘do better.’
The proposed rule both increases the effectiveness of CRA and enhances its implementation and compliance for banks. We look forward to working with regulators to further improve the rule as it goes through review and final adoption.
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Press Contact: Alfred King alfred.king@responsiblelending.org